Citizens Republic Said to Seek Buyers

August 03, 2012, 1:07 p.m. EDT 1 Min Read

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Citizens Republic Bancorp Inc. (CRBC), the Michigan lender that has yet to repay a $300 million U.S. government bailout, is soliciting takeover bids from competitors, said three people with knowledge of the matter.

The bank hired JPMorgan Chase & Co. (JPM) to find a buyer and has contacted suitors in recent weeks, according to the people, who spoke on condition of anonymity because the effort is private. The company, which had a market value of more than $700 millionThuyrsday, has also explored other ways to pay back its 2008 bailout, including by issuing equity, they said.

Huntington Bancshares Inc. (HBAN), which also operates in Michigan, may be interested, said one of the people. Flint-based Citizens has lost more than $1 billion since 2007 on bad commercial and residential real-estate loans.

The shares climbed 5.7 percent to $18.64 at 11:29 a.m. in New York after earlier advancing as much as 7.9 percent.

Kristine Brenner, director of investor relations at Citizens Republic, declined to comment. A spokeswoman at JPMorgan declined to comment. Maureen Brown, a spokeswoman at Huntington, said the company doesn't comment on speculation or rumor.

The U.S. Treasury appointed two directors to the board last year after the bank stopped paying dividends on the bailout funds. Michigan's economy fared worse than the country's as a whole during the latest recession, and the jobless rate stood at 8.6 % in June, compared with 8.2% nationally.

Citizens Republic had $1.04 billion of shareholders' equity as of March 31, and $18.83 of book value per common share. It operates through its Citizens Bank subsidiary, founded in 1871.

Among the banks with the most deposits in Michigan are Huntington and Fifth Third Bancorp, both based in Ohio, and Pennsylvania's PNC Financial Services Group Inc., according to data compiled by the Federal Deposit Insurance Corp.